Mike Krzus

My work is focused on developing and communicating ideas to improve the quality and relevance of corporate reports for the benefit of shareowners and the capital markets.

What does your corporate report say about your company?

A corporate report should explain how the company creates value for current and future generations of shareowners.

Value creation for current and future generations of shareowners requires that the board of directors and senior executives "have the courage to make long-term value-creating decisions despite the short-term consequences." (Marc Goedhart, Tim Koller, and David Wessels. The real business of business. McKinsey & Company. March 2015.) This characteristic is the foundation for balancing demands for short-term competitiveness and profitability with the imperative for the long-term viability of the company.

The concept of value creation for current and future generations is, in my non-legal opinion, consistent with the board of directors fiduciary duty to act in the best interests of the corporation. In some states, the board also has a fiduciary duty to act in the best interests of the shareowners.

What your reporting should say about your company

  • The role of the board

    Describe the oversight role of the board with respect to strategy development and execution; recruiting, developing, and retaining talented people; risk management; and capital expenditures.

  • Board and executive compensation

    Explain the link between board and executive incentive compensation and progress towards achieving medium- and long-term strategic goals.

  • Business model

    Outline the business model and the value drivers of short-term profitability and long-term viability.

  • View of the market

    Discuss management's view of the company's global and local markets.

  • Competitive advantages

    Identify sources of competitive advantage.

  • Objectives, plans, and KPIs

    Explain medium- and long-term strategic objectives; execution plans; and related metrics/KPIs used to measure progress.

  • People

    Articulate management's processes for recruiting, retaining, and developing people.

  • Capital allocation

    Explain medium- and long-term allocation plans for capital expenditures, R&D, dividends, etc.

  • Risks

    Identify material risks, including material ESG risks, and discuss mitigation plans.

  • Performance

    Discuss performance in the current year relative to short-, medium-, and long-term targets.

This framework was inspired by One Report: Integrated Reporting for a Sustainable Strategy (Eccles and Krzus, 2010); International Integrated Reporting Framework (IIRC, 2013); Rising to the challenge of short-termism (FCLTGlobal, 2016); and The Economic Significance of Long-Term Plans (KKS Advisors and The Strategic Investor Initiative, 2018).

Mike Krzus

Founded Mike Krzus Consulting after retiring as a Partner of Grant Thornton LLP in 2011. Work history also includes Arthur Andersen, Illinois Central Railroad, BDO Seidman, Checkers Simon & Rosner, and Illinois Central Gulf Railroad. A 38-year career focused on SEC rules and regulations, accounting principles, audit and assurance standards, financial reporting, internal audit, developing and presenting continuing professional education, public policy, sustainability reporting, and integrated reporting.

Member of the SAM Research AG Faculty core team; a Cecil and Ida Green Honors Professor at Texas Christian University, Neeley School of Business; and one of Trust Across America's Top 100 Thought Leaders in Trustworthy Business Behavior.

Author/coauthor of three books, five book chapters, and 40 articles, research papers, and business cases. Speaker at 48 corporate, investor, and academic events in 12 countries.

Proud to have served three years in the U.S. Army, including a tour of duty in Vietnam with the 3rd Brigade, 1st Cavalry Division (Separate).

CONTACT

Mike Krzus

mpkrzus(AT)mikekrzus(DOT)com